Hello, I have an investment property that has had a great run. I no longer want to manage individual properties though. Is there a way to move my proceeds to a passive investment options using 1031 exchange?
@Raj Kothari what exactly are you wanting to get into? How much of a gain will you have on the property?
The property value increase is over 60% (unlevered). Cash on Cash would be about 150% in profit. Now, in terms of what to get into, I am open to options - specifically looking for property backed crowd sourcing opportunities that would qualify as 1031 exchange. This is new to me, so not sure what I am asking actually exists or is feasible.
Where is your property located?
Hi @Raj Kothari -
Congratulations on the success with your investment! I happen to have worked with several individuals in your situation. Someone who has had success with smaller real estate deals is looking for a more passive option with professional management in place. I'll send you a private message to discuss further.
@Raj Kothari Yes it’s a classic strategy to use the 1031 exchange to move from active to passive management. Residential to Nnn commercial properties is one such transition. So are Tenants in common products and Delaware statutory trusts. The key to a successful 1031 is that you are purchasing actual interest in real estate and not an interest in a company like a reit or typical LP syndication
@Raj Kothari as @Dave Foster mentioned there are passive investments that qualify as real estate and can be used as replacement property. A syndicated Tenant in Common structure or a Delaware Statutory Trust are two options. If you have a financial advisor it would be best to discuss these structures with them to see if they are the right fit for your goals. They are very illiquid and have an average of 5-7 years hold time. They do range in sector and geographic location but can be a great option for someone looking for a passive 1031 replacement.
Yes, like Lauren said, we have done TICs on multiply occasions for that exact reason. Last year, with put together a TIC for two individuals each with around a million dollars to purchase a value-add multifamily property in Charleston. Happy to be a resource to talk you through the how.
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